Stock performance snapshot
Illinois Tool Works (ITW) has seen mixed share performance recently, with the stock up 0.9% over the past day and 2.0% over the past week, but down 6.3% over the past month.
Over the past 3 months, the stock is down 13.0%, while the year to date return is 1.1%. Over longer periods, the total return stands at 4.8% over the past year, 21.1% over 3 years, and 21.6% over 5 years.
See our latest analysis for Illinois Tool Works.
With the share price at $252.20, recent momentum has faded, with a 30 day share price decline offsetting a modest year to date gain, while total shareholder returns over multi year periods remain positive.
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With Illinois Tool Works growing revenue at 3.6% and net income at 5.6% annually, yet trading at a discount of about 8.9% to analyst targets and an indicated intrinsic premium, is this a genuine opportunity or is future growth already priced in?
Most Popular Narrative: 8.1% Undervalued
With Illinois Tool Works last closing at $252.20 against a narrative fair value of $274.54, the current price sits below what the most widely followed model suggests, with that view grounded in detailed assumptions about growth, margins, and valuation multiples.
The analysts have a consensus price target of $274.54 for Illinois Tool Works based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $317.0, and the most bearish reporting a price target of just $219.0.
Read the complete narrative. Read the complete narrative.
Want to see what sits behind that fair value gap? The narrative leans on moderate revenue growth, firmer margins, and a future profit multiple that assumes consistent execution. Curious which specific earnings and valuation assumptions have to hold for that pricing to make sense?
Result: Fair Value of $274.54 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, risks around weaker organic growth in key segments and potential tariff or AI related pressure on high margin hardware could easily challenge that fair value story.
Find out about the key risks to this Illinois Tool Works narrative.
Another View: Cash Flows Point the Other Way
There is a clear tension here. While the analyst narrative suggests Illinois Tool Works is about 8.1% undervalued at $252.20 versus a $274.54 fair value, the SWS DCF model indicates the stock trades well above an estimate of future cash flow value at $164.36, which frames the shares as expensive instead.
If earnings based fair value and cash flow based fair value disagree this sharply, which lens do you trust more for a long term decision: the multiple driven analyst framework or the cash flow math?
Look into how the SWS DCF model arrives at its fair value.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Illinois Tool Works for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 48 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.
Next Steps
Mixed messages on value and risk can be confusing. This is a good time to look through the numbers yourself, weigh both sides, and see what stands out in the full breakdown of 4 key rewards and 1 important warning sign
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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